What is the EU budget?

The EU budget is an important tool that puts EU policies into practice. It finances actions that Member States cannot fund on their own or that they can fund more economically by pooling their resources.

The EU budget is adopted through a democratic procedure: it is prepared by the European Commission (the EU’s executive body) and is then discussed and agreed by the Council of the EU (representing EU Member States, including Sweden) and by the European Parliament (where the democratically elected Swedish representatives sit).

Once adopted, the budget is then managed either jointly by the EU Member States and the Commission, or directly by the Commission.

In practice, 80 % of the EU budget is managed by national or regional governments. Through grants, loans and other forms of financing, the EU budget provides financial support to hundreds of thousands of beneficiaries such as students, scientists, NGOs, SMEs and towns and regions.

Where does the money come from?

The EU budget is largely financed by ‘own resources’ which are based on three kinds of sources:

customs duties on imports from outside the EU and sugar levies,

a small part of the value added tax (VAT) levied in the EU,

gross national income (GNI): each Member State transfers a standard percentage of its GNI to the EU. This forms the largest source of income for the EU budget (74% in 2013).

This system has been unanimously decided on by the EU Member States for a 7-year period, and ratified by all the national parliaments. Its aim is to provide a reliable and sufficient level of revenue for the EU budget, while at the same time taking into account the Member States’ ability to pay. Each Member State thus contributes in line with its wealth.

The other sources of revenue for the EU budget include taxes on EU staff salaries, fines on companies for breaching competition laws and bank interest, etc. There is no direct EU tax. EU countries remain in control of their taxes.

Where does the money go?

Some 94 % of EU money is spent on the various EU policies, and most of it goes back to Member States. In many cases the EU budget supports large and complex projects. One of them is the European Partnership Action against Cancer, where collective European effort helps to prevent the disease and find a cure for it.

Approximately 6 % of the EU budget is spent on the functioning of the EU institutions. This is used to pay for the salaries and pensions of EU employees, translation and interpretation, security, buildings and IT systems etc. This expenditure is necessary in order to allow the EU to work.

Too many EU civil servants?

There are around 55 000 EU civil servants and other employees serving 508 million Europeans and countless people in need around the world. By comparison, the city of Gothenburg alone employs 49 000 employees whereas the European Commission employs less than 33 000 people.

Furthermore, in order to adapt to the harsh economic situation in Europe, the EU institutions are also cutting costs: the Commission’s wide-ranging staff reform is expected to save EUR 8 billion by 2020, reducing its staff by 5 %, while at the same time increasing its working hours.

The charts below provide an overview of how much the EU invested in each of its Member States in 2013, and show the contribution of European funding to each country’s wealth. In Sweden, EU funding represents 0.38 % of the country’s GNI (Gross National Income).

Who keeps an eye on EU spending?

The Commission has put into place robust internal control measures in order to ensure that funds are spent efficiently and effectively.

As 80 % of the EU budget is managed by national or regional governments, Member States also play an important role in ensuring that rules are observed, and in detecting and addressing irregularities and fraud.

Additionally, the European Court of Auditors reviews the EU accounts every year. For several years the Court has confirmed that the EU accounts are properly kept, but also points out errors in procedures (e.g. accounting errors by national programme participants or claims for non-eligible costs). Errors do not mean that EU money is lost, wasted or affected by fraud. A large part of the money spent in error is recovered.

In addition, the European Parliament approves how the Commission has spent the budget following the end of every financial year.

If you want to see who has received EU funding, the financial transparency system will show you which entities have received payments from the EU budget.

The EU multiannual framework 2014-20 in brief

Although the EU budget is adopted every year, it must be established within the limits of the multiannual financial framework (MFF). The MFF is an expenditure plan setting maximum annual amounts which the EU can spend in different fields of activities over a 7-year period. It therefore shapes the EU's political priorities for 7 years.

For the next financing period (2014-2020),the Commission wants to focus on what Europe needs to overcome the economic and financial crisis, and concentrate on areas where the EU can make a difference. Key proposals include:

A focus on growth, jobs and competitiveness with increased investment in education and research, and a new Connecting Europe Facility fund to boost pan-European infrastructure projects for transport, energy, information and communication technologies.

A higher quality of spending thanks to simpler rules for EU funds, a clear focus on investments producing tangible results, as well as the possibility of suspending EU-funding if a country fails to implement sound economic and fiscal policies.

A reformed common agricultural policy for a more competitive and environmentally-friendly European agriculture.

The fight against climate change as a key component of all major EU policies and devoting 20 % of the 2014-20 MFF to measures related to this.

Solidarity with the poorest EU countries and regions by concentrating the largest portion of regional funding in those parts of the EU and by introducing a new youth employment fund.

reduced administrative expenditure growth thanks to cuts in staffing numbers at European institutions.

The EU budget and Sweden

In 2013, Sweden’s public expenditure amounted to around SEK 1 928 billion (EUR 222 billion) – that is just slightly more than the SEK 1 251 billion (EUR 144 billion) EU budget for the same year. However, it represented 51 % of the country’s GNI, whereas the EU budget for the 28 Member States was roughly 1 % of the Union’s GNI.

The EU and national budgets serve different, yet complementary purposes. The EU budget targets areas where EU money can generate added value. For example, a project of such magnitude as the European satellite navigation system Galileo could not be financed by a single Member State alone.

Unlike Sweden’s budget – or any other national budget – the EU budget does not fund defence expenditure or social protection, but is mostly investment spending. For example, the EU is financing a project involving eight countries in the Baltic region, which aims to improve on-land response to oil spills and prevention of pollution from maritime transport.

Sweden pays more into the EU budget than it receives directly. However, this net balance does not accurately reflect the many benefits of EU membership. Many of them, such as peace, political stability, security and freedom to live, work, study and travel anywhere in the Union cannot be measured. In addition, European investments are intended to benefit the EU as a whole, and European funding in one country can benefit other EU members as well. For example, Swedish company Skanska built a motorway in Poland, for which it received around SEK 599 million (EUR 69 million) in EU funding.

Thanks to the single market, which makes it easier for EU countries to do business with one another, almost 58 % of Swedish exports went to European countries in 2013. This represents some SEK 634 billion (EUR 73 billion) or more than 30 times the Swedish net contribution to the EU budget. For a relatively small and export-dependent country like Sweden, trade agreements are of utmost importance.

Operating budgetary balance: the difference between what a country receives from and pays into the EU budget. There are many possible methods of calculating budgetary balances. In its financial report,the Commission uses a method based on the same principles as the calculation of the correction of budgetary imbalances granted to the United Kingdom (the UK correction). It is, however, important to point out that constructing estimates of budgetary balances is merely an accounting exercise of the purely financial costs and benefits that each Member State derives from the Union and it gives no indication of many of the other benefits gained from EU policies such as those relating to the internal market and economic integration, not to mention political stability and security.

Agriculture and rural development

Most of the money Sweden receives from the EU goes towards its agriculture, rural development and nature conservation (55 % in 2013). EU agricultural policy supports farmers, promotes safe and good food and stimulates rural economies. But it also plays an important role in looking after the environment, for example by encouraging farmers to use new technologies for more sustainable farming.

Too much money spent on agriculture?

EU countries have made agriculture a European rather than a national policy. It is the only policy almost entirely funded by the EU. That is why it represents a large proportion of the EU budget. It is also less costly for EU countries as a whole, than implementing 28 different national policies. The common agricultural policy has undergone a major reform, whereby its share of the EU budget has fallen from 70 % in 1985 to around 40 % today, and is set to continue falling to 33 % in 2020. A new reform which came into force in 2014 further strengthens European agricultural competitiveness, making it more environmentally friendly and reducing the gap for countries receiving less money than the EU average.

Research

The second largest share of the money Sweden receives goes to growth and jobs, including research. Investment in R&D is the key to creating jobs and growth, but also to tackling some of the biggest issues of our time, such as energy, food security, climate change and an ageing population. Sweden is among the world’s leaders in research and innovation, and over 3 400 participants – be they research institutes, universities or SMEs – have already received funding through the EU’s 2007-13 research programme. For example, Swedish researchers are taking part in an EU-funded research project to develop a small solar power system.

Regional policy

The third largest share of the money goes to its regional policy. It aims at reducing the economic, social and territorial disparities between Europe’s regions. Regional funds invest in a wide range of projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. They are helping to set-up services to assist the elderly in remote regions of Sweden, and financing a state-of-the-art test-lab for IT and telecom companies.

Did you know?

Sweden takes part in the EU Baltic Sea strategy: an organised cooperation between Baltic countries enabling them to deal with common challenges together: cleaning-up the Baltic Sea, improving transport networks, developing the economy and combating trafficking and organised crime.

All values in national currencies have been converted using exchange rates from October 2013.

EU Projects near you

Infrastructure and transport

Important infrastructure project in the Bothnian Corridor

This partly EU-funded project aims at developing a double track railway line between Gävle and Sundsvall, an important section of the Bothnian Corridor, with the construction of three 750m-long stations at Källene, Stegskogen and Gårdsjön. The main objective is to increase the capacity of the Gävle-Sundsvall line in order to accommodate existing and expected traffic increases during the 2013-2020 period and to reduce delays. (EU funding: SEK 20 million — EUR 2.292 million)

Agriculture and rural development

Need a lift? Download the app!

Using EU funds to develop a unique mobile phone application, Tolg village council in Sweden has created a car sharing system to offset the poor local bus service. One month after the start of the scheme, 93 people had already registered, and many new stops were created in the village. Car-sharing has become an accepted and positive alternative – and opens new doors for those without a car. (EU funding: SEK 78 177 — EUR 9 000)

Keeping young entrepreneurs in rural areas

When the youth division of the Swedish Farmers Federation in the Jönköping county identified a looming lack of farmers, it turned to the EU for help. Many older farmers are about to retire, but very few young people appeared willing or prepared to take over these rural businesses. An EU-funded project offered training, education and mentoring support for young entrepreneurs, enabling them to stay in rural areas rather than seeking work elsewhere. (EU funding: SEK 1.26 million — EUR 145 254)

Growth and jobs

A state-of-the-art test lab

Compare, a Swedish cluster organisation for IT and telecoms companies in the Karlstad area, has created one of Sweden’s most modern and innovative independent laboratories for testing IT solutions. It offers companies the opportunity to carry out testing, quality assurance and software and system certification for IT infrastructures. Testlab II, a more advanced version, now tests IT systems for public authorities and large companies, assessing their vulnerability by trying to knock-out a system and measuring how well it can cope. (EU funding: SEK 6.9 million — EUR 791 676)

Did you know?

The new EU programme, ‘Cosme’, with a budget of SEK 20 billion (EUR 2.3 billion), aims at boosting the competitiveness of large and small companies. It improves access to finance for SMEs, providing equity and loan facilities, and facilitates access to markets inside the Union and beyond, supporting international industrial cooperation: Ultimately the programme promotes entrepreneurship, especially among new entrepreneurs, young people and women.

Coaching people back into work and study

The Coaching Project, set up in the Swedish municipalities of Sandviken and Hofors, seeks to give two disadvantaged groups, young people and immigrants, the boost they need to find employment. Participants have a coach, are given work experience and attend training sessions. The project also tackles well-being, with a cognitive therapist teaching confidence-boosting techniques, and a health coach supporting those with sleeping or eating disorders. (EU funding: SEK 19.6 million – EUR 2.26 million)

Education, culture and social inclusion

Erasmus programme

Some 3 728 Swedish students studied or worked abroad in 2011-13 thanks to the Erasmus exchange programme. They received a grant from the European Commission towards the extra costs of living abroad. Visually impaired Karl-Fredrik Ahlmark from Gothenburg spent six months studying in the UK. The trip triggered an interest in spending more time abroad. He has subsequently studied at a research institute in Istanbul, and completed an internship in Brussels.

Older people for older people

The O4O project (Older people for Older people) developed alternative ways of providing support and services for older people living in rural areas of northern Europe by mobilising the elderly to help their peers. In Sundom, for instance, elderly people were offered training in paying bills over Internet, communication via social network sites, using Skype, reading newspapers online and using other relevant services. (EU funding: SEK 10.4 million — EUR 1.2 million)

Did you know?

Swedish writer Sara Mannheimer was one of the winners of the 2012 European Union Prize for Literature for her book ‘Handlingen’ (The Action). Every year, the European Union Prize for Literature rewards the best new or emerging authors in the EU. Each winner receives SKK 43 431 (EUR 5 000) and priority funding from the EU Culture Programme to get their book translated into other languages.

Health and research

The modern face of healthcare

Several eHealth services are being tested in Sweden, Finland, Norway and the UK to develop tele-medicine in sparsely populated regions. In Sweden, patients suffering from aphasia, Parkinson disease or dyslexia have been able to receive speech therapy via videoconference. (EU funding: SEK 8.1 million — EUR 933 011)

Mini solar-power systems at home (Germany, Italy, Malta, Sweden)

Swedish research organisation ‘Projects in Motion’ is taking part in the EU-funded DIGESPO project to develop small solar-power systems allowing homes and workplaces to generate their own electricity and meet their heating and cooling requirements. (EU funding: SEK 28.7 million — EUR 3.3 million)

Revolutionary new material

Discovered by scientists at Manchester University, Graphene is set to become the wonder material of the 21st century, becoming as important as steel or plastics. The Graphene project, coordinated by Chalmers University of Technology in Gothenburg, brings together academic and industrial research groups, to investigate and exploit the material’s unique properties. (EUR funding: SEK 469 million — EUR 54 million)

Environment and energy

Reducing gas emissions from ships

The Clean North Sea Shipping (CNSS) project, which brings together 18 partners from 6 countries, is reducing exhaust gas emissions from ships in the North Sea region. The project is seeking to increase the use of environmentally friendly technologies and fuels in shipping, without diminishing competitiveness within the North Sea maritime transport sector. It creates awareness, shares knowledge and provides influential stakeholders with the information they need to take action. (EU funding: SEK 11.3 million — EUR 1.3 million)

Smart agriculture for the Baltic region

The six countries involved in the Baltic Deal project bring together farmers’ advisory organisations and more than 100 farms from around the Baltic Sea, including Sweden. The goal is to increase the level of expertise in agri-environmental practices, help farmers reduce agricultural pollution, including that of the Baltic Sea. The project also addresses eutrophication, which remains unsatisfactory in the region despite decreased nutrient loads. (EU funding: SEK 26 million — EUR 3 million)

Did you know?

The EU invested SEK 18.2 billion (EUR 2.1 billion) in 2007-13 to support environmental and nature conservation projects via its LIFE+ programme. Projects raise awareness of important environmental issues, and fund the protection of Europe’s most valuable natural sites (Natura 2000 sites), such as the Vindelälven River, and the Nordic Alvaret habitat on Sweden’s Öland island.

European Social Fund: a personal story (video)

Learning lessons for life

All values in national currencies have been converted using exchange rates from October 2013.